Not more than a year ago, a Nashville-area home placed on the market for lease typically would sit a minimum of a month, would rarely draw competition from multiple hopeful renters, and would likely command a modest monthly payment and a standard one-year lease.
What changes a year can make.
Nowadays, those same homes can rent within hours, two-year leases are not uncommon, and the $2,000-per-month mark, minimum, is the rule.
Indeed, the home rental business is hot, and real estate professionals have taken note.
“I’ve never seen anything close to this. It’s like a stampede to get into a house,” said Gaius Hill, a 32-year residential real estate industry veteran and owner of Christian Realty in Brentwood.
Hill said it is not uncommon for a single-family freestanding home — assuming it’s priced appropriately — to land a renter the very day it hits the market.
“We listed a house on a Saturday in Rutherford County and leased it Sunday,” he said with no degree of surprise.
“There is a paradigm shift in the residential real estate market the likes of which I have never seen, and it’s going to continue for the next two to three years,” Hill added.
The numbers bolster Hill’s assessment.
For example, Hill said the area located between Interstate 40 and Murfreesboro Road typically offers at least 60 single-family homes, and often as many as 80, for rent at any one time. As of late August, that same area had only 14.
Rental homes of even average quality get snapped up very quickly, he said, and here’s why: There is simply not enough supply to meet the demand, as many folks — for various reasons — are choosing to rent instead of buy.
“Since the first of the year, we’ve gone from managing about 50 homes to handling about 112,” Hill said.
Williamson County highlights the scarcity of homes for rent, too. Hill said the affluent county, as of late August, had only 87 homes for rent, and he said at least 30 of those are condos.
“That is a small number when you do not consider condos and include areas like Fairview [which is almost exclusively composed of single-family free-standing homes],” he said.
Michele Friedrichsen, a Nashville-based Realtor with Bob Parks Realty, said that in her attempts to find rental homes for clients, the competition is fierce.
“I am coming up against multiple people within two or three days of having applications on the house,” she said. “If you do not see the house within the first two to three days [it goes on the market], that house will be leased.
“I’ve been doing this for 10 years, and I’ve never seen anything like this,” Friedrichsen added. “In the past, you could actually negotiate the price down. That is not the case now.”
Friedrichsen said she recently looked at a house in Hendersonville and saw two different parties dropping off deposits.
“I’m in Wilson County, and I have clients looking in Sumner County, Green Hills ...”
Beverly Browning, owner and manager of Nashville-based Browning-Gordon & Co., said homes can, indeed, rent within a couple of weeks, “but they have to be priced right.”
“It’s different today than it was two or three years ago,” Browning said.
A member of the National Association of Residential Property Managers local chapter, Browning said she continues to gauge the level of home rental movement.
“I’ve talked to members of the chapter, and everybody says business is great, and homes are renting,” she said.
Jackie McCormick, owner of Hendersonville-based McCormick Property Management and Realty LLC, noted two major changes within the industry.
One emerging trend involves the return of the investor market.
“The last couple of years, it had died,” she said of that segment. “It was hard to get investor loans.”
McCormick noted another trend: Renters know that in an uncertain economy, they may not be able to buy for some time. So they’re now willing to commit to renting a house for a longer term.
“We’re getting more two-year leases than we used to,” she said. “And on occasion, we can get a three-year lease.”
McCormick said her company is “extremely busy.” Rentals used to slow down every year around October, she said, but not any more: “People will rent a week before Christmas or Thanksgiving.”
Gaius Hill said his company’s average time to lease a home is seven days.
“What we’re typically seeing happen is that within four to five days, someone has seen [the home], and they verbally commit,” he said. “Within the next week, we’ll have at least two more parties show interest. We’re seeing a 3-to-1 ratio. A lot of property owners are seeing this and are using their homes as a cash cow.
“We started seeing this trend coming to the front in February of this year,” Hill said, adding that rent prices have jumped 20 to 25 percent this calendar year alone. “We knew it was coming.”
For those looking to rent a nice home, the good news is the pool of prospective properties might soon increase.
“I predict we’ll have a huge influx of homes come onto the market this fall,” he said, “as sellers realize they can’t sell.”